New airline prepares for takeoff from Carlsbad

Ted Vallas, the 90-year-old founder of California Pacific Airlines, stands before his first counter at Palomar Airport in Carlsbad. The airline is currently seeking certification from the Federal Aviation Administration and hopes to be in the air in 2012.
— Charlie Neuman / U-T

Ted Vallas, the 90-year-old founder of California Pacific Airlines, stands before his first counter at Palomar Airport in Carlsbad. The airline is currently seeking certification from the Federal Aviation Administration and hopes to be in the air in 2012.
— Charlie Neuman / U-T

San Diego County could soon become home base to the first commercial airline since the iconic Pacific Southwest Airlines disappeared into the folds of USAir in the 1980’s.

In fact, California Pacific Airlines already exists on paper and in the physical presence of a check-in counter at the McClellan-Palomar Airport in Carlsbad. A management team and operations plans are assembled and a small fleet of Embraer 170 aircraft is waiting in the wings.

All that is needed for the airline to begin service to the first half-dozen cities on its itinerary is Federal Aviation Administration certification. And that, says the 90-year-old founder of the airline, Ted Vallas, is close enough to begin planning for an early 2012 launch.

This isn’t the first airline on Vallas’ resume, but times have certainly changed since Air Resorts flew in the 1980s and ‘90’s. To get certified back then, Vallas recalled over coffee in The Landing restaurant at Palomar Airport, four operations manuals were submitted to the FAA for certification. They covered everything from Air Resorts’ back office, to in-flight service, to maintenance, to the check-in counter.

So far, said Vallas, California Pacific has been two years in development and 14 staff members have composed 32 highly detailed manuals that have been submitted to the FAA.

FAA spokesman Ian Gregor could only confirm that the airline is working with the San Diego Flight Standards District Office to get certification. “Getting a new airline certified is a very complex process,” he added, “and it’s not possible to say when that might occur.”

Between 2000 and 2010, the Department of Transportation certified 92 air carriers, according to DOT public affairs spokesman Bill Mosley in Washington D.C. “Of these, 47 remain in operations today,” he said.

California Pacific is pressing ahead, developing a public presence for the airline as if the first jets are waiting for passengers on the tarmac. The first six cities targeted for non-stop service are prominently listed in the airline literature — Phoenix, Las Vegas, San Jose, Oakland, Sacramento and its home base, San Diego North. The airline expects to add Cabo San Lucas and Mexico City. In the long term, California Pacific expects to have a presence in 26 markets.

At the end of year one, the airline plans to have 105 employees and by the end of its fifth year, 550, said Vallas.

In both demeanor and price, California Pacific wants to compete with the feisty budget carriers, especially Southwest Airlines. But while there will be no fees for baggage, CalPac Air plans to assign seats.

“If we can get 10 percent of their business, we’ll be fine,” said Vallas, referring to Southwest. “If we get 15 percent, we’ll be doing great.”

Vallas has invested $3 million into California Pacific Airlines. And, sure, there is risk, but Vallas sees it as a carefully calculated risk. He expects the airline to be operating in the black by the end of its first year.

He cites the low cost of operating in North County, a population that is bigger today than the whole county’s in the 1960’s.

California Pacific will start with three leased, 60-passenger Embraers and pick up a fourth about a month after operations begin, he said. Eventually, the airline will purchase its own jets. Recently, the airline hired an operations boss with start-up experience, Lawrence “Bud” Sittig. As president and chief operating officer it will be Sittig’s job to get California Pacific off the ground. Vallas said he’ll remain as chairman of the board and a major investor.

“I’ve been through the certification process before at Skybus,” said Sittig, who also had a long career with Delta Airlines. “The FAA certificate journey is long and arduous, representing the first significant milestone in launching a start-up airline. ... We are beginning to see the light at the end of a very long tunnel.”

But is this the time for a start-up airline to be emerging from the end of a tunnel?

Stephen Van Beek, a strategic industry and policy analyst for airports with LeighFisher Inc., said that a year and a half ago he might have had concerns about the chances of a start-up given the economic climate. “Now that airlines do have a bit of their pricing power back,” he said, “there is room at the bottom for new entrants.”

How the majors react to an upstart can also affect its future, said Van Beek, citing United’s aggressive fare pricing response to the recent entry of Virgin America into the Chicago market.

“They can make it a challenge,” he said.

On the other hand, he cites as big pluses such factors as the growing North County population and reduced hassles of flying out of Palomar, the constrained capacity of Lindbergh Field, the use of new airplanes with “lots of cabin space and big airplane feel” and destinations “in the top 10 markets for San Diegans.”

“All things being equal — and they know what they’re doing — they’ve got as good a chance as anyone,” said Van Beek.

Vallas, who flirted briefly with a professional baseball career in his youth, is no stranger to risk. He’s made shrewd economic gambles in one form or another since buying and resuscitating his first golf course in 1958, El Camino Country Club in Oceanside. A few years later he picked up the course now known as Morgan’s Run in Rancho Santa Fe.

It was while designing and building golf courses around the world that Vallas picked up his first airline, a Caribbean island hopper from American Airlines that later became Air Resorts. Over the decades, Vallas started numerous airline industry-related companies out of Palomar.

Peter Drinkwater, director of county airports, also sees the challenges ahead for California Pacific but adds “if anyone has the right stuff to get an airline off the ground, it is Ted Vallas.”

He is happy that the airline will provide more travel options for North County residents. Palomar is serviced only by United Express, which offers numerous daily flights to Los Angeles.

“We’re keeping our fingers crossed that all goes as planned,” said Drinkwater.

Vallas is, too. Although a vigorous 90-year-old who regularly plays 18 holes of golf, even with a recent knee replacement, Vallas candidly states “I don’t have too many years left.” He said he’d like to see California Pacific Airlines taking to the air successfully as part of his legacy, sooner, rather than later.